BILL ANALYSIS Ó
AB 759
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
759 (Linder)
As Amended September 4, 2015
Majority vote
--------------------------------------------------------------------
|ASSEMBLY: | 77-0 | (April 30, |SENATE: |39-0 | (September 9, |
| | |2015) | | |2015) |
| | | | | | |
| | | | | | |
--------------------------------------------------------------------
Original Committee Reference: TRANS.
SUMMARY: Expressly authorizes recreational vehicle (RV) dealers
to sell remaining inventory after a franchise agreement ends and
makes other technical amendments related to automobile and RV
franchise agreements and their oversight by the New Motor
Vehicle Board (Board).
The Senate amendments:
1)Add cross references to existing code sections with new code
sections created by this bill.
2)Add provisions from AB 1178 (Achadjian) of the current
legislative session, to avoid chaptering out conflicts.
AB 759
Page 2
3)Make related, technical amendments.
EXISTING LAW:
1)Charges the California Department of Motor Vehicles (DMV) with
licensing and regulating dealers, manufacturers, and
distributors of motor vehicles that conduct business in
California.
2)Establishes the Board as a program within DMV, with oversight
provided by the California State Transportation Agency
(CalSTA).
3)Authorizes the Board to act in a quasi-judicial capacity to
resolve disputes between franchise dealers and
manufacturers/distributors of new motor vehicles, including
motorcycles and RVs.
4)Prescribes the Board's operational procedures.
AS PASSED BY THE ASSEMBLY, this bill:
1)Created separate and distinct code sections for Board
oversight procedures of automobile franchises and RV
franchises.
2)Established operational requirements for the Board's oversight
of RV franchise agreements, similar to those currently used
for automobile franchises, including:
a) Established quorum standards;
b) Established judicial review procedures;
AB 759
Page 3
c) Established protest hearing procedures; and,
d) Established document mailing procedures.
3)Expressly authorized RV dealers to sell remaining inventory
after a franchise agreement has been terminated, cancelled, or
is not renewed.
4)Made related clarifying and conforming changes.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: The Board was created in 1967 as the New Car Dealers
Policy and Appeals Board. At the time of its inception, the
Board's functions were limited to hearing appeals that arose
from final decisions made by the DMV. In 1973, the Legislature
passed the California Automobile Franchise Act, which gave the
Board its present name and tasked it with regulating and
settling disputes in the new motor vehicle industry. The
Board's current mission is to enhance relations between dealers
and manufactures of automobiles, RV's, and motorcycles by
resolving disputes in the industry in an efficient, fair, and
cost-effective manner.
According to the author, existing law contains extensive
provisions relating to the Board's role in resolving franchise
disputes between auto manufacturers and dealers. He notes that
over time, provisions have been added and amendments have been
made to include reference to RV's along with automobiles. The
author notes, however, that inclusion of RV references have been
"spotty" and inconsistent. Specifically, the author notes that
"One problem is that existing provisions in the auto[mobile]
sections sometimes reference RVs, and sometimes the RV sections
AB 759
Page 4
contain references to motor vehicles." The author, along with
the sponsors, the Recreational Vehicle Industry Association
(RVIA) and the California Recreational Vehicle Dealers
Association (CalRVDA), contend that separating provisions
relating to automobiles from those relating to RVs with respect
to Board oversight is needed to provide clarity and consistency.
In addition to clarifying and conforming amendments to the code,
this bill also contains a number of technical changes relating
to operations of the Board. The author points out that these
changes were suggested by the Board to the sponsors and are
needed to improve operations. These changes include the addition
of quorum standards currently in place for motor vehicle dealer
franchise disputes, adding the requirement for use of certified
mail for judicial review proceedings, allowing the Board to hold
hearings on protests pertaining to RV franchises (identical to
those for automobile franchises), allowing the Board to make
decisions on protests pertaining to RV franchises (identical to
those for automobile franchises), establishing a judicial review
under RV franchise provisions (identical to those for automobile
franchises), and incorporating references to violations that
would enable the Board to revoke or suspend a manufacturer's
license (identical to those for automobile franchises).
While the majority of this bill's provisions work to achieve
this consistency in the codes governing the Board's oversight,
there is one exception related to the new authority provided in
this bill to RV franchises with the respect to sale of inventory
after a franchise agreement is ended. Specifically, the bill
provides authorization for an RV dealership to sell remaining
units in inventory after a franchise relationship has ended.
According the sponsors, this has been the existing practice for
some time, despite the fact that it is not expressly authorized.
They note that there are differences in the way automobiles and
RVs are held by their respective dealerships that necessitates
this authority. Specifically, for automobiles, the dealer holds
the inventory but it is owned by the manufacturer. Therefore,
when an automobile franchise agreement is ended, the vehicles
are simply returned to the manufacturer. For RVs, however, the
AB 759
Page 5
RV dealer purchases inventory outright from the manufacturer.
Therefore, when there is a termination of a franchise agreement,
the dealer owns the inventory and it is not possible for them to
return unsold RVs to the manufacturer. Instead, the RV dealer
must sell a new RV to recoup their costs. Without the express
authorization, the RV dealer would be required to sell remaining
inventory as "used" since they are technically listed as the
owner. Since there is substantial depreciation on RVs, this
would represent a significant loss to an RV dealer. The
provisions in this bill would codify the existing practice of RV
dealers being allowed to sell the remaining inventory after a
franchise agreement ends.
Please see the policy committee analysis for full discussion of
this bill.
Analysis Prepared by:
Victoria Alvarez / TRANS. / (916) 319-2093 FN:
0002299